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What GAO Found

In fiscal year 2015, the Social Security Administration (SSA) recovered $857 million in Disability Insurance (DI) overpayments that it erroneously made to beneficiaries; however, SSA is missing opportunities to recover more. More than three-fourths of the recovered overpayments in fiscal year 2015 were collected by withholding all or a portion of a beneficiary's monthly benefits. SSA's policy is to set withholding repayment amounts based on a beneficiary's income, expenses, and assets, but its policy regarding which expenses are reasonable is not clear. Moreover, SSA cannot know if repayment periods and amounts are consistently determined due to a lack of oversight, such as supervisory review or targeted quality reviews. Further, SSA lacks concrete plans for pursuing other debt recovery options, while GAO's analysis suggests that some options could potentially increase collections from individuals having their benefits withheld. For example, about half of withholding plans at the end of fiscal year 2015 extended beyond SSA's standard 36-month time frame, and could be shortened. Making the minimum monthly repayment 10 percent of a beneficiary's monthly benefit, instead of the current $10 minimum, would shorten the median length of all scheduled withholding plans by almost a third (from 3.4 years to 2.3 years) and result in an additional $276 million collected over the next 5 years.

While SSA officials reported an increase in recent years in the amount of civil monetary penalties imposed, SSA currently lacks reliable data to effectively track the disposition of penalties and administrative sanctions. For example, SSA cannot readily track the amounts ultimately collected from penalties, which are fines imposed by the Office of the Inspector General (OIG) and collected by SSA. Further, SSA currently has only two paths for collecting on penalties—withholding benefits and voluntary payment. A recent OIG audit found that the majority of uncollected penalty amounts it reviewed were from individuals who were not receiving SSA benefits and with whom SSA had no ongoing collection actions. SSA determined it is able to use certain alternative collection tools, such as wage garnishment, but only recently began drafting regulations to use them, and the regulations are still undergoing internal review. In addition, SSA lacks and had not explored obtaining authority to use other tools for collecting penalties that it uses for collecting overpayments—such as credit bureau reporting. Related to administrative sanctions, SSA could not provide reliable data on how often it imposes sanctions, a punishment in which benefit payments are temporarily stopped. SSA's process of manually entering sanctions information into a database may be subject to errors or omissions. Regional officials said this can result in incomplete information and staff not taking appropriate action on cases. SSA changed its procedure in 2013 to direct that all potential sanctions first be reviewed for potential prosecution or civil monetary penalties, but SSA's lack of reliable data prevents it from determining whether this new procedure achieved the intended effect of more consistent application of sanctions. In an internal evaluation of its procedures, SSA identified weaknesses with how sanctions decisions are tracked and communicated, but it is in the early stages of deciding how to address them. The shortcomings in SSA's use of penalties and sanctions potentially diminish the deterrent value of these actions against individuals who may fraudulently obtain benefits.

Why GAO Did This Study

SSA's DI program provides cash benefits to millions of Americans who can no longer work due to a disability. While most benefits are paid correctly, beneficiary or SSA error can result in overpayments—that is, payments made in excess of what is owed. In fiscal year 2015, SSA detected $1.2 billion in new overpayments, adding to growing cumulative debt. Further, when individuals inappropriately obtain benefits in certain situations, SSA can levy penalties or withhold benefits for a period of time. GAO was asked to study the use of these actions, and SSA efforts to recover overpayments.

This report examined how and to what extent SSA recovers overpayments, and imposes penalties and sanctions. GAO analyzed data on existing DI overpayments and repayment amounts at the end of fiscal year 2015 to determine the effect of potential improvements in recovery methods on collection amounts; and reviewed relevant federal laws, regulations, policies, and studies.

What GAO Recommends

GAO is making eight recommendations to SSA, including: clarify its policy and improve oversight related to debt repayment plans, pursue additional recovery options for overpayments and penalties, and improve its ability to track penalties and sanctions. SSA agreed with seven, but disagreed with a recommendation on debt recovery options. GAO maintains the options merit exploration, as discussed further in the report.

For more information, contact Daniel Bertoni at (202) 512-7215 or bertonid@gao.gov.

Recommendations for Executive Action

Status: Open

Comments: As a result of the Bipartisan Budget Act of 2015, SSA gained the ability to use the Access to Financial Information (AFI) system to verify information about the assets of beneficiaries. In February 2017, the agency reported it is continuing to work on clarifying its policy for assessing the reasonableness of expenses used in determining repayment amounts, including guidance on using the new AFI process. As part of this effort, SSA is also reviewing the Internal Revenue Service's (IRS) Collection Financial Standards and determining whether it can incorporate these or similar standards in its policies for determining reasonable repayment amounts. We will continue to track SSA's efforts to clarify its policies, including efforts to incorporate IRS standards.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should clarify its policy for assessing the reasonableness of expenses used in determining beneficiaries' repayment amounts to help ensure that withholding plans are consistently established across the agency and accurately reflect individuals' ability to pay.

Agency Affected: Social Security Administration

Status: Open

Comments: SSA agreed with this recommendation, but does not believe that it is necessary to conduct supervisory reviews. As of February 2017, SSA reported that it is exploring system, policy, and training opportunities to better ensure staff appropriately complete benefit withholding agreements. We will continue to track SSA's efforts to improve oversight in this area.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should improve oversight of DI benefit withholding agreements to ensure that they are completed appropriately. This could include requiring supervisory review of repayment plans or sampling plans as part of a quality control process, and requiring that supporting documentation for all withholding plans be retained to enable the agency to perform such oversight.

Agency Affected: Social Security Administration

Status: Open

Comments: According to SSA, Section 834 of the Bipartisan Budget Act of 2015 gave the agency the authority to use the Access to Financial Information system as part of the agency's waiver determination process. SSA reported that, as of February 2017, it also considered using the National Directory of New Hires Query for verifying an overpaid beneficiary's financial information, but preliminarily determined that the information in this system would be of limited value since it is a quarterly report of past earnings. SSA states that it continues to explore other options to verify financial information such as The Work Number and the Interstate Benefit Inquiry. We will monitor SSA's efforts to explore additional options for verifying financial information.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should explore the feasibility of using additional methods to independently verify financial information provided by beneficiaries to ensure that complete and reliable information is used when determining repayment amounts. These additional tools could include those already being used by the agency for other purposes.

Agency Affected: Social Security Administration

Status: Open

Priority recommendation

Comments: SSA agreed with this recommendation and as of April 2017, it estimated that this would result in an additional $213 million in collections over a 5-year period. The fiscal year 2017 President's budget submission contained a legislative proposal to make this change, but has not yet been enacted. In April 2017, the agency reported that, in the third quarter of fiscal year 2017, it intends to resubmit a regulatory change to establish the minimum withholding rate to 10 percent in the event that its legislative proposal is not included in the fiscal year 2017 budget.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should adjust the minimum withholding rate to 10 percent of monthly DI benefits to allow quicker recovery of debt.

Agency Affected: Social Security Administration

Status: Open

Comments: As of February 2017, SSA continued to disagree with this recommendation. For debt subject to benefit withholding, which is not considered delinquent debt, SSA asserted that these measures would not have a significant effect on the amount of debt recovered, especially compared to the option of changing the minimum withholding rate to 10 percent of monthly benefits. For delinquent debt, SSA stated charging interest on debts would require substantial changes to multiple systems that affect its overpayment businesses processes, and would require extensive training to its employees. We continue to believe there is merit in further consideration of these measures. While SSA reported it has studied the potential changes needed to charge interest on debt, without further consideration of, for example, the costs and benefits of charging interest or adjusting withholding amounts according to cost of living adjustments, SSA cannot know the extent to which these options would improve debt recovery efforts or help protect the value of debts against the effects of inflation, which can be substantial given that withholding plans can take decades to complete.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should consider adjusting monthly withholding amounts according to cost of living adjustments or charging interest on debts being collected by withholding benefits. Should SSA determine that it is necessary to do so, it could pursue legislative authority to use recovery tools that it is currently unable to use.

Agency Affected: Social Security Administration

Status: Open

Comments: In June 2016, SSA reported that: it had drafted regulations to use existing external debt collection tools for penalties, was developing a legislative proposal to allow the use of additional debt collection tools such as Federal salary offset and credit bureau reporting, and had started planning for a multi-activity, multi-year administrative sanctions project. In February 2017, SSA reported that, as part of its administrative sanctions project, the agency revised policy guidance on factors significant to OCIG's civil monetary penalty determinations. We will track SSA's progress in applying new tools to collecting penalties.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should pursue additional debt collection tools for collecting delinquent penalties. This includes taking steps to implement tools within its existing authority and exploring the use of those not within its authority, and seeking legislative authority if necessary.

Agency Affected: Social Security Administration

Status: Closed - Implemented

Comments: As of January 2018, officials reported that SSA has deployed its Civil Monetary Penalty Tracking System nationally. This system allows staff to track a number of data points regarding penalties, such when a penalty was imposed, the amount of the penalty and amounts being repaid, and the date that staff last checked the status of the penalty. Officials also noted that the system tracks penalties to ensure that they are posted to a debtor's record and will alert staff if this action is not taken within 30 days. Additionally, officials told us that the agency reviews the information in the system in order to set SSA goals for collections.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should take steps to collect complete, accurate, and timely data on, and thereby improve its ability to track civil monetary penalties and their disposition.

Agency Affected: Social Security Administration

Status: Open

Comments: As of February 2017, SSA reported that it has been developing a new workload tracking tool for administrative sanctions. The first phase of this tool was implemented in December 2016 and allows SSA to track administrative sanction cases throughout the development process. The second phase, expected to be implemented by September 2017, will provide SSA with management information on sanctions cases. We will continue to monitor SSA's process in developing this tool. We will close this recommendation once the tool is implemented.

Recommendation: To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, the Acting Commissioner of the Social Security Administration should take steps to collect complete, accurate, and timely data on, and thereby improve its ability to track administrative sanctions and their disposition.